Historic Agreement Shapes Steel Giant's Future Trajectory
In a significant development for Europe's steel industry,thyssenkrupp Steel and IG Metall have successfully negotiated an agreement inprinciple that establishes the framework for the comprehensive restructuring ofGermany's largest steelmaker. The deal, announced on May 7, 2025, builds uponthe industrial concept presented by the Steel Executive Board in November 2024and represents a crucial step toward positioning the company as an independent,competitive entity prepared for future challenges. This breakthrough comesafter months of complex negotiations between management and laborrepresentatives, with both sides acknowledging the necessity of structuralchanges while working to minimize social impacts. The agreement creates apathway for subsequent collective bargaining negotiations, which are expectedto conclude by summer 2025, providing much-needed clarity for the company'sworkforce and stakeholders.
Production Capacity Adjustments Address MarketRealities
A central element of the agreement involves adjustingthyssenkrupp Steel's production capacity to align with current marketconditions. The industrial concept calls for reducing capacity to a shippinglevel between 8.7 and 9 million metric tons, reflecting the company's strategicresponse to persistent overcapacity in European steel markets. Despite thesereductions, the agreement emphasizes continued commitment to the company'sgreen transformation through the construction of a direct reduction plant. As asecond transformation step, plans are being developed to potentially constructan electric steel plant at the Duisburg location, further advancing thecompany's decarbonization efforts. These capacity adjustments represent adelicate balance between addressing immediate economic pressures andmaintaining the company's long-term technological competitiveness in anincreasingly carbon-constrained regulatory environment.
Siegerland Plant Gains Reprieve Under New Terms
The future of the Eichen plant at the Kreuztal location inSiegerland has been a particularly contentious issue throughout negotiations.Under the new agreement, both parties have committed to avoiding an immediateclosure decision for the facility. Instead, a concept for optimizing theSiegerland location will be implemented in the short term, with the goal ofensuring economically viable operations. This arrangement provides a potentiallifeline for the plant and its workforce, though with clear accountabilitymeasures. A comprehensive review of these optimization measures will beconducted by the end of the 2027/28 financial year at the latest, at whichpoint a definitive business decision on whether to continue operating the plantwill be made. For the "Castroper Strasse" location in Bochum, theagreement includes examining the possibility of accelerating its alreadyplanned closure, reflecting different strategic priorities across the company'sproduction network.
Personnel Adjustments Necessary Despite JobProtection Focus
While avoiding compulsory redundancies remains a declaredobjective for both thyssenkrupp Steel and IG Metall, the agreement acknowledgesthe unavoidable reality that comprehensive personnel adjustments will berequired across all sites. This comes in the context of earlier announcementsthat up to 11,000 jobs at the steel unit would need to be cut or outsourced aspart of the restructuring plan. The agreement establishes a structured processto evaluate which activities should remain within the company and which can beoutsourced or sold. This approach reflects a pragmatic recognition ofcompetitive pressures while attempting to minimize direct job losses throughalternative measures such as early retirement programs, voluntary separationpackages, and potential transfers to other operations. The personnel adjustmentstrategy represents one of the most challenging aspects of the restructuringplan, balancing economic necessities with social responsibilities in a regionwhere steel production has long been a cornerstone of employment.
Strategic Imperative Drives TransformationTimeline
Senior leadership at thyssenkrupp Steel has emphasized theurgency of implementing the industrial concept to restore the company'scompetitive position. Dr. Marie Jaroni, Chief Sales and Transformation Officer,characterized the agreement as "an important strategic step" thatsignals forward momentum while providing "a solution-oriented frameworkfor the way ahead." Her comments underscored the time-sensitive nature ofthe restructuring process, stating, "We now urgently need to continueputting our industrial concept into effect, so that we can become competitiveagain. We have no time to lose here." This sense of urgency reflects thechallenging market conditions facing European steelmakers, including highenergy costs, regulatory pressures related to carbon emissions, and intensecompetition from producers in regions with lower production costs. Theagreement's timeline, with collective bargaining negotiations to be concludedby summer 2025, establishes a clear schedule for translating the conceptualframework into concrete implementation plans.
Workforce Clarity Prioritized in ImplementationApproach
Dirk Schulte, Chief Human Resources Officer and LaborDirector at thyssenkrupp Steel, highlighted the importance of providing clarityand future prospects for the company's workforce as a key priority in theimplementation process. "Above all, we must now establish clarity for ourworkforce and outline prospects for the future," Schulte stated,acknowledging that "the upcoming restructuring process will demand a greatdeal from us." His comments emphasized the value of collaborative problem-solving,noting that success would be best achieved "through all those involvedassuming joint responsibility." This approach recognizes the significanthuman dimension of industrial restructuring and the importance of transparentcommunication and inclusive processes in maintaining workforce engagementduring periods of organizational change. The focus on clarity and futureprospects represents an attempt to manage the uncertainty that inevitablyaccompanies major restructuring initiatives, particularly in industries withstrong labor representation and deep community ties.
Green Transformation Continues DespiteFinancial Constraints
Despite the financial andoperational challenges driving the restructuring process, thyssenkrupp Steelremains committed to its green transformation strategy. The agreementexplicitly confirms that construction of the direct reduction plant willcontinue systematically, maintaining the company's trajectory towardlower-carbon steelmaking. The potential addition of an electric steel plant atDuisburg would represent a further significant step in this transformationjourney. This continued commitment to decarbonization reflects both regulatoryimperatives and the growing market premium for lower-carbon steel products,particularly from automotive and construction sector customers with their ownambitious emissions reduction targets. By maintaining investment in greentransformation even while restructuring operations, thyssenkrupp Steel isattempting to position itself for long-term viability in a carbon-constrainedfuture while addressing immediate competitive challenges. This dual focusrepresents a defining characteristic of the industrial concept and theagreement with IG Metall, balancing short-term economic necessities withlonger-term strategic positioning.
Key Takeaways:
• thyssenkrupp Steel and IG Metall have reached anagreement in principle on implementing the industrial concept presented inNovember 2024, with collective bargaining negotiations expected to conclude bysummer 2025, establishing a framework for making Germany's largest steelmakerindependent and competitive.
• Production capacity will be reduced to between 8.7 and 9million metric tons due to market conditions, while the company continues itsgreen transformation with the construction of a direct reduction plant andpotential development of an electric steel plant at Duisburg.
• The agreement provides a potential reprieve for theEichen plant in Siegerland through an optimization concept, with a finaldecision on its future to be made by the end of the 2027/28 financial year,while both parties acknowledge the necessity of personnel adjustments acrossall locations despite aiming to avoid compulsory redundancies.
